BISMARCK — A price spike resulting from a surge in natural gas demand during the intense cold front that gripped much of the country last week may be passed on to customers in the Upper Midwest.
For some households in Minnesota and North Dakota, the damage could be in the range of several hundred dollars of additional heating costs, a hit that utility companies and regulators of both states are looking to spread over a longer period of time.
At a hearing of Minnesota’s Public Utilities Commission on Tuesday, Feb. 23, CenterPoint Energy, the state’s largest natural gas utility, estimated an increase in customers’ utility bills between $300 and $400, a cost that could be spread over more than a year.
And though the bump for North Dakota customers may be somewhat lighter, two of the state's largest natural gas providers said they're also expecting noticeable increases, spread over time. Xcel Energy, which provides gas for about 60,000 North Dakota customers and 475,000 Minnesota customers, projected a $250 to $300 increase, while Montana-Dakota Utilities, which provides gas for about 115,000 North Dakotans, said it doesn’t expect increases to exceed $100.
Regulators on the Minnesota side have already launched an investigation into the price spike, voting Tuesday to examine the impacts on households in the state, while utility regulators on North Dakota’s Public Service Commission indicated that they will decide whether to open their own investigation at a meeting next week.
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“I definitely want to pursue it, and I would expect that we will,” said PSC chairwoman Julie Fedorchak, who noted that their investigation would be targeted at the recent spike but would look for ways to hedge against similar problems in the future.
“I think there’s some really important questions that we need to answer and some decisions that need to be made about how to mitigate the impacts of these significant increases,” she said.
In the unusual cold snap that hit many southern states last week, demand for natural gas heating skyrocketed. Utility customers told Minnesota regulators at Tuesday's hearing that they kept pace by purchasing outsized volumes of natural gas on the spot market, where prices exceeded 50 times their normal average between Feb. 12 and 17. The price spike was further exacerbated by the extreme winter conditions that froze much of the natural gas infrastructure in southern states, hamstringing production.
For some North Dakota customers, the price jump associated with this natural gas demand crunch may compound an already steeper bill. The frigid North Dakota weather earlier this month is likely to increase the cost on MDU customers' bills by 40% over normal temperatures, according to company spokesman Mark Hanson.
Randy Fordice, a spokesman for Xcel Energy, noted that the company has hedging policies in place but said that it is not immune to the fallout from the unusual conditions of this month. Customers would typically pay off the price increase over the course of a year, beginning with the annual billing cycle in the fall, but regulators could stretch that span further, he said.
“While we expect there to be impacts due to the high natural gas prices during the cold snap, we’ll work with our regulators and stakeholders to minimize the effects of those prices on our customers,” Xcel said in a statement.
Matthew Guerry contributed reporting to this story.
Readers can reach Forum reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com.
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